According
to data from CCM, the domestic ex-works price of citric acid underwent a
downtrend during Sept.-Nov. 2013. In detail, the ex-works price of anhydrous
citric acid decreased significantly from USD1,072/t in Sept. 2013 to USD909/t
in Nov. 2013. Notably, it fell sharply with a month-on-month growth rate of
-14% in Nov. As for the trend of the ex-works price of monohydrate citric acid
was similar to that of anhydrous one during Sept.-Nov. 2013.
As early
as June-Aug. 2013, manufacturers increased the ex-works price of citric acid
several times due to the increasing product cost and the peak season of the
drinks industry, which increases demand for citric acid after suffering losses
due to the low price of citric acid in the first five months of 2013.
The
decrease in the ex-works price of citric acid during Sept.-Nov. 2013 could be
attributed to the following aspects:
First and
most important, weak demand for citric acid. Compared with H1 2013, the
ex-works price of citric acid remained high during Sept.-Oct. 2013 so that
dealers had weak desire to purchase large amounts of this product. Besides, as
entering the off season of drinks, the demand for citric acid from the beverage
industry atrophied accordingly.
Additionally,
China is the largest citric acid producer in the world, and the consumption of
this product depends on the overseas market to a great extent. However, citric
acid exports remained weak in this period. According to data from China
Customs, the export volumes of citric acid were 51,425 tonnes in Sept. and
52,501 tonnes in Oct., 7,155 tonnes and 6,079 tonnes less than that in Aug.
respectively.
Second,
the decrease in the cost. As the supply of corn has been increasing since Oct.
2013, the market price of corn declined in Oct., and it fluctuated at a low
level in Nov. 2013.
Moreover,
under the current circumstance of citric acid overcapacity, in order to occupy
more market share, manufacturers have carried out low price tactics during this
period. Also, towards the end of 2013, manufactures have a strong desire to
sell their stock of citric acid to get funds.
It is
estimated that the ex-works price of citric acid will remain stable in Dec.
2013. Generally, the profitability of citric acid has been very low due to the
decreasing sales price of this product. Plus, with downstream dealers willing
to purchase citric acid for stock at its current lower price, it is unlikely
that citric acid producers will decrease the price. However, winter is the
traditional slack season of citric acid, so demand for it will still be
limited, which will hardly drive up its price.
In the
long term, citric acid will still face challenges in China, as its export
volume may be affected by the European Union (EU)'s sunset review and midterm
review investigations on China's citric acid, which started on Nov. 30, 2013 by
the European Commission, in response to applications from SA Citrique Belge and
Jungbunzlauer Austria AG. The midterm review investigation is mainly to survey
the damage form in the anti-dumping measure. The Hs Codes of correlated
products are 29181400 and ex29181500.
In Sept.
2007, the EU launched an anti-dumping investigation into China's citric acid,
and in Dec. 2008, the EU issued its final ruling.
The
Netherlands, Germany, Italy and Spain are the main EU destinations of China's
citric acid. In 2012, China had exported 117,620 tonnes of citric acid to these
four countries, accounting for 16% of the total export volume of domestic
citric acid.
If the EU
rules to continue anti-dumping measures against China's citric acid during the
implementation term of anti-dumping measures, it may have a negative influence
on China's export of citric acid in the near future
Furthermore,
the demand for citrate will also have a certain impact on the demand for citric
acid, as it is a direct downstream product of citric acid and its consumption
relies on the overseas market as well.
Similarly,
the Netherlands, Germany, Belgium, Spain, Italy and Poland are also the main EU
export destinations of China's citrate. Data from China Customs shows that in
2012, China had exported a total of 42,700 tonnes of citrate to these six
countries, accounting for around 33% of China's total export volume of citrate.
2013
annual review of China's corn products industry
China
returns 120,000 tonnes of GM corn to the US again
Chinese
corn products Imp. & Exp., Oct. 2013
China's
inositol export value up but volume down, Jan.-Oct. 2013
Price
update of corn products, Dec. 2013
China's
ex-works price of citric acid undergoes downtrend, Sept.-Nov. 2013
China's
ex-works price of lysine shows overall decline, Jan.-Nov. 2013
North
China Pharmaceutical to compensate USD153 million for VC price fixing
Meihua
Group commits to product development recently
Overview
of new carbohydrate source—solid fructose-glucose
Applications
of functional oligosaccharide in soybean products and collagen beverage
Nationwide
government corn purchase for temporary reserve starts
2013/2014
minimum sugarcane purchase price in Guangxi decreased
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